Vermont Economy

In 2007, Vermont was ranked 32nd among states in which to do business. It was 30th last year.[12]

According to the 2005 U.S. Bureau of Economic Analysis report, Vermont’s gross state product (GSP) was $23 billion. This places the state 50th among the 50 states. It stood 38th in per capita GSP. [13][14] The per capita personal income was $32,770 in 2004.

Components of GSP were:[15][16]

• Government - $3,083 million (13.4%)
• Real Estate, Rental and Leasing - $2,667 million (11.6%)
• Durable goods manufacturing - $2,210 million (9.6%)
• Health Care and Social Assistance - $2,170 million (9.4%)
• Retail trade - $1,934 million (8.4%)
• Finance and Insurance - $1,369 million (5.9%)
• Professional and technical services - $1,276 million (5.5%)
• Construction - $1,258 million (5.5%)
• Wholesale trade - $1,175 million (5.1%)
• Accommodations and Food Services - $1,035 million (4.5%)
• Information - $958 million (4.2%)
• Non-durable goods manufacturing - $711 million (3.1%)
• Other Services - $563 million (2.4%)
• Utilities - $553 million (2.4%)
• Transportation and Warehousing - $484 million (2.1%)
• Educational Services - $478 million (2.1%)
• Administrative and Waste Services - $436 million (1.9%)
• Agriculture, forestry, fishing, and hunting - $375 million (1.6%)
• Arts, Entertainment, and Recreation - $194 million (.8%)
• Mining - $100 million (.4%)
• Management of Companies - $35 million (.2%)

Agriculture contributes $2.6 billion,[17] about 12%, directly and indirectly to the states economy.[18]

Over the past two centuries, Vermont has had both population explosions and population busts. First settled by farmers, loggers and hunters, Vermont lost much of its population as farmers moved west into the Great Plains in search of abundant, easily tilled land. Logging similarly fell off as over-cutting and the exploitation of other forests made Vermont's forest less attractive. Although these population shifts devastated Vermont's economy, the early loss of population had the beneficial effect of allowing Vermont's land and forest to recover. The accompanying lack of industry has allowed Vermont to avoid many of the ill-effects of 20th century industrial busts, effects that still plague neighboring states. Today, most of Vermont's forests consist of second-growth.

Of the remaining industries, dairy farming is the primary source of agricultural income.

In recent years, Vermont has been deluged with plans to build condos and houses on what was relatively inexpensive, untouched land. Vermont's government has responded with a series of laws controlling development and with some pioneering initiatives to prevent the loss of Vermont's dairy industry.

In 1947 there were 11,206 dairy farms in the state. In 2003 there are fewer than 1,500, a decline of 80%. The number of cattle had declined by 40%. However, milk production had doubled in the same period due to tripling the production per cow.[19]

An important and growing part of Vermont's economy is the manufacture and sale of artisan foods, fancy foods, and novelty items trading in part upon the Vermont "brand" which the state manages and defends. Examples of these specialty exports include Cabot Cheese, the Vermont Teddy Bear Company, Fine Paints of Europe, Vermont Butter and Cheese Company, several micro breweries, ginseng growers, Burton Snowboards, Lake Champlain Chocolates, King Arthur Flour, and Ben and Jerry's Ice Cream. Vermont's Agency of Agriculture, Food & Markets maintains the highest dairy standards in the U.S.[citation needed] Only France's Minister of Agriculture, Food, Fishing and Rural Affairs (see Minister of Agriculture (France)) has standards for butterfat content equal to Vermont's.

In 2001, Vermont produced 275,000 US gallons (1,040,000 L) of maple syrup, about one-quarter of U.S. production. For 2005 that number was 410,000 accounting for 37% of national production. [20] The Vermont Department of Agriculture maintains a rating standard for maple syrup that is higher than the U.S. Department of Agriculture's, all other states, and Canada.[citation needed]

In 2000, only 3% of the state's working population was still engaged in agriculture.[21]

IBM, in Essex Junction, is Vermont's largest for-profit employer. It provides 25% of all manufacturing jobs in Vermont. It is responsible for $1 billion of the state's annual economy.[22]

Vermont is the 17th highest state in the nation for mortgage affordability. However, in 41 other states, inhabitants contributed within plus or minus 4% of Vermont's 18.4% of household income to a mortgage.[23]

As of 2006, there were 305,000 workers in Vermont. 11% of these are unionized.[24][25]

A 2007 survey claimed that Vermonters were the least satisfied with their job in the whole nation and were the most likely to be making plans to leave.[26]

Captive insurance plays an increasingly large role in Vermont's economy. With this form of alternative insurance, large corporations or industry associations form standalone insurance companies to insure their own risks, thereby substantially reducing their insurance premiums and gaining a significant measure of control over types of risks to be covered. There are also significant tax advantages to be gained from the formation and operation of captive insurance companies. According to the Insurance Information Institute, Vermont in 2004 was the world's third-largest domicile for captive insurance companies, following Bermuda and the Cayman Islands.[27]

Tourism is the state's largest industry. It contributes $4.1 billion to the state's economy or 27% of the gross state product.[28] This is the highest percentage in the country.

In winter, the ski resorts Stowe, Killington Ski Resort, Mad River Glen, Sugarbush, Stratton, Jay Peak, Okemo, Mount Snow and Bromley host skiers from around the globe, although their largest markets are the Boston, Montreal and New York metropolitan areas. In the summer, resort towns like Stowe, Manchester, and Woodstock host visitors. Resorts, hotels, restaurants, and shops, designed to attract tourists, employ people year-round.

Summer camps contribute to Vermont's tourist economy. Trout fishing, lake fishing, and ice fishing draw outdoor enthusiasts to the state, as does the hiking on the Long Trail. In winter, nordic and backcountry skiers visit to travel the length of the state on the Catamount Trail. Several horse shows are annual events. Vermont's state parks, historic sites, museums, golf courses, and new boutique hotels with spas were designed to attract tourists.

The towns of Rutland and Barre are the traditional centers of marble and granite quarrying and carving in the U.S. For many years Vermont was also the headquarters of the smallest union in the U.S., the Stonecutters Association, of about 500 members. Up the western side of the state runs the "Marble Valley" joining up with the "Slate Valley" that runs from just inside New York across from Chimney Point till it meets the "Granite Valley" that runs south past Rutland, home of the Rock of Ages quarry, the largest granite quarry in America. Vermont is the largest producer of slate in the country. Production of dimension stone is the greatest producer of revenues by quarrying.

Vermont stands 14th highest out of 50 states and the District of Columbia for state and local taxation, with a per capita load of $3,681. The national average is $3,447.[29] However, CNNMoney ranked Vermont highest in the nation based on the percentage of per capita income. The rankings showed Vermont had a per capita tax load of $5,387, 14.1% of the per capita income of $38,306.[30]

Vermont collects personal income tax in a progressive structure of five different income brackets, ranging from 3.6% to 9.5%.

Vermont's general sales tax rate is 6%, which is imposed on sales of tangible personal property, amusement charges, fabrication charges, some public utility charges and some service contracts (some towns impose an additional 1% Local Option Tax). There are 46 exemptions from the tax which include medical items, food, manufacturing machinery, equipment and fuel, residential fuel and electricity, clothing, and shoes with a purchase price of $110 or less. A use tax is imposed on the buyer at the same rate as the sales tax. The buyer pays the use tax when the sellers fails to collect the sales tax or the items are purchased from a source where no tax is collected. The use tax applies to items taxable under the sales tax. Property taxes are imposed for the support of education and municipal services.

Vermont does not assess tax on intangible personal property. Vermont does not collect inheritance taxes; however, its estate tax is decoupled from the federal estate tax laws and therefore the state still imposes its own estate tax.

Vermont is the only state in the union not to have a balanced budget requirement.[31]

In 2007, Moody's Investors Service gave its top rating of Aaa to the state.[32]

Lake Champlain.